In a simple economy, households receive wages from firms and then use these wages to buy goods and services. What would happen if households save a more significant portion of their income?

Question

Answer

The real flow of goods and services will decrease, but nominal flows will remain unaffected.

Answer

The real flow of goods and services will remain constant, but nominal flows will decrease.

Answer

The real and nominal flows of goods and services will increase as households spend more.

Answer

The real flow of goods and services will decrease, and nominal flows may decrease if firms reduce production.

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In a simple economy, households receive wages from firms and then use these wage...

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